Huawei does over AUD 600 million of business in Australia each year and just signed a significant AUD 80 million contract to deliver communications to the rail system in Western Australia.
Despite this, the Australian government banned the Chinese telecoms giant from building Australia’s 5G network. The reason: national security.
So, what is it about the 5G network that sees Chinese firms banned, even when industry analysts claim that either of these firms could build it for up to 30% cheaper than other bidders?
Huawei, in particular, is very vocal in protesting its innocence. The firm says it may still take legal action based on the free trade agreement that exists between Australian and China. Domestic Chinese media called this a “stab in the back” from Australia.
In a major speech in June 2018, Huawei’s Australian chief John Lord, a former Admiral in the Royal Australian Navy, said the company was the “most audited, inspected, reviewed and critiqued” ICT operator in the world, but nothing had ever been found.
Meanwhile, Huawei was active in Australia’s 4G network buildout, is an active partner in the NZ national broadband network, and is partnering with M1 in Singapore on 5G.
The firm secured the contract to build Papua New Guinea’s domestic and international network. The network will connect with an Australian funded international internet cable that presumably will also send messages between national governments in Port Moresby and Canberra.
In this game of claims and counterclaims, it is difficult to understand what Australia's concerns might be. But it might be more than a coincidence that the country’s new Cyber Security Centre opened earlier this month on Canberra’s outskirts.
Earlier this year, the chief of Cyber and Electronic Warfare Division for Australia’s Defence Science and Technology Group, Dr. Dale Lambert, told CDOTrends in an interview that there was a "lot of prodding, poking and testing" going on as a diversity of players sought to probe Australia's cyber defenses.
"Cyber is a priority for everyone now, and there are three reasons for that," he said.
“The first is that we are sensing [sic] everything now. Gartner estimates that there will be 1 trillion sensors in the world by the early 2020s.
“The second is that everything is going more digital. There are 2 billion active Facebook users for example.
“And the third is that we are distributing all of these with the Internet of Things connecting our physical and virtual devices through the internet and other networks.”
Australia's 2016 Defence White Paper identified cyber warfare as a priority and included an AUD 730 million Next Generation Technologies Fund, while cyber defense is one of five pillars of the Government’s Cyber Security Strategy.
China is routinely identified as a leading source for cyber attacks on Australia. Chinese hackers have infiltrated the Australian National University, Australian law firms and also a defense contractor working on the Joint Strike Fighter, the new aircraft for the Royal Australian Airforce.
What this has to do with Huawei or ZTE building Australia’s 5G network is probably classified information. But for its part, Huawei insists it is a private company and deals in technology, not secret information.
Much is made of the fact that a former soldier founded the company in the People's Liberation Army, Ren Zhengei, and the company regularly fights perceptions that it is a trojan horse for the Chinese Communist Party.
"We often joke in Huawei that outside of China we are seen as the untrustworthy communists, and inside of China we are viewed as the greedy capitalists,” John Lord said in his June speech.
One thing for sure is that Australia’s decision was not economically or financially motivated. It is quite the opposite.
Huawei has accused the decision of being "politically" motivated, but Australian defense analysts say that the sole motivation is national security.
But as many technologists have pointed out, Huawei and ZTE are not entirely banned from doing business in Australia.
They will exist and work at the edge of the network, but not at the core.
How that plays out remains to be seen. What is certain after this decision is that Australia's 5G network will take longer to build and will be significantly more expensive.
That is the price the Government is prepared to make business and consumers pay to preserve what it sees as national security.